Friday, October 28, 2011

GUEST COLUMN: "Trade Pacts Could Benefit Ohio Farms, Factories, and Freight Haulers" by Rep. Schmidt

Rep. Jean Schmidt
By Rep. Jean Schmidt

I traveled to Panama last week to discuss implementation of a free-trade agreement.

During the visit, I met with Panama’s president, Ricardo Martinelli, and participated in panel discussions on economic development with members of the country’s National Assembly. The topics included issues that could benefit Southern Ohio.

I’m excited about what the expansion and improvement of the Panama Canal could mean for Hamilton, Clermont, Brown, Adams, and Scioto counties – all of which border the Ohio River and are part of the 2nd Congressional District. I also represent nearby Pike County and Warren County, and they might benefit as well.

Commercial traffic on the Ohio River averages more that 150 million tons a year, and much of the cargo that passes by my district eventually is transferred to sea-going vessels destined for ports throughout the world.

That cargo includes coal, crude oil, petroleum products, sand, gravel, iron, steel, chemicals, and grain.

A lot of that cargo ends up traveling through the Panama Canal.

Although there is some uncertainty as to what the ultimate impact of the Panama Canal’s expansion and improvements will be, the results likely will be positive for both Panama and the United States.

For Panama, the completion of the project in 2014 will mean more jobs, economic growth, enhanced national pride, less unemployment, and less poverty.

For us, the project should translate into faster shipping times, especially between the East Coast of the United States and Asia.

Faster shipping means cheaper shipping. And cheaper shipping means many U.S. products will now become financially competitive in Asian markets.

The Cincinnati Enquirer recently detailed the excitement and enthusiasm of some political and business leaders in Southern Ohio. They are trying to prepare for new economic opportunities that might result from increased commercial river traffic as a result of the expansion and improvements to the Panama Canal.

“Freight volume in the region is expected to grow by 56 percent over the next three decades, including a 5.5 percent rise in barge freight,” the newspaper reported.

Three separate free-trade agreements that I worked hard for in the House – involving Panama, Colombia and South Korea – were approved the week before I traveled to Central America.

These free-trade agreements could be a boon for farmers, manufacturers, and freight haulers throughout the 2nd Congressional District. That’s because the agreements eliminate tariffs that made U.S. products unnecessarily expensive in those countries.

The Ohio Soybean Association estimates that the free-trade agreements will result in a $3 billion increase in soybean exports to the three trading partners. Slightly over half of that, $1.8 billion, will come from increased soybean purchases by South Korea, the association said.

Because agricultural exports move in bulk, water-borne freight is likely to grow as goods are carried by barge down the Ohio and Mississippi rivers to the Gulf of Mexico. This bump in river traffic also is expected to result in construction of terminals and other necessary infrastructure to handle the purchases from our trading partners.

These are the kinds of things that actually stimulate an economy – buyer and seller, supply and demand. Such economic activity causes businesses to grow and unclench their grip on cash, which they have been saving to keep their companies viable in case the economy takes another dive.

The free-trade agreements provide us with hope for the future, and recent history shows it’s more than wishful thinking.

Statistics compiled by the U.S. Department of Commerce show that American exports to a dozen countries increased by an average of 25.6 percent in the first three years after free-trade agreements took effect between 1985 and 2008. Taken together, the increased business between the United States and these trading partners is expected to provide a $12 billion shot in the arm for the American economy.

Making a deal with South Korea was a big prize. The Koreans went out of their way to make life difficult for American car makers who had sought to sell vehicles in that market. South Korea would almost whimsically change fuel-efficiency standards on American cars exported there, setting mileage and safety requirements that U.S. carmakers couldn’t meet. Either the rules kept changing or the new standards would price American cars out of the market, according to a report by Bloomberg News.

Some of this seemed like a college prank – such as limiting the square footage for U.S. dealerships in Korea, which resulted in cramped showrooms. Or tinkering with the size of the country’s license plates so they wouldn’t fit on the bumpers of U.S.-built cars, Bloomberg reported.

I hope all of that is behind us now – that we can put away the whoopee cushions and water balloons. It’s time to get our rails, roads, and rivers ready to carry more of the commerce of our factories and farms.